SEMINAR

Forensic analytics is the procurement and analysis of electronic data to reconstruct, detect, or otherwise support a claim of financial fraud. The main steps in the process are data collection, data preparation, data analysis, and reporting. Forensic analytics aims to detect of fraud, errors, and cases where people gravitate to specific numbers or number ranges to circumvent internal control thresholds.

This workshop with Mark Nigrini, author of Forensic Analytics, is an opportunity to learn about Benford’s Law and other analytic techniques to detect and prevent employee and supplier misconduct using interesting case studies and discussions. The workshop will include an updated version of his Benford’s Law presentations at the 2012 and 2013 ACFE Global Conferences, an updated version of his Forensic Analytics pre-conference session at the 2014 Global Conference in San Antonio, an updated version of his fraud numbers sessions at the 2014 Global Conference, and an updated version of his The Nathan Mueller Fraud Scheme: A Personal Touch with Prevention and Detection Strategies sessions that were presented at the ACFE Global Conference in Baltimore in June, 2015."

The workshop will include case studies related to using Benford’s Law, case studies related to analytics assignments undertaken by the instructor, case studies related to fraud cases studied by the instructor, and case studies published by the instructor. In August, 2014 Nigrini and Mueller published a co-authored article in the Journal of Accountancy (http://www.journalofaccountancy.com/). The lunch session will include a description of the fraud scheme, the preventive and detective steps that would have been effective in preventing and detecting the fraud, together with some photos as well as personal statements made by Nathan Mueller in his CPA Insider article (http://goo.gl/j5N2nk)

The main workshop topics are:

• Benford’s Law, including the theory explained in an interesting and understandable way, interesting mathematical aspects of the law, a review of authentic data sets that conformed and some fraudulent data sets that didn’t follow Benford’s Law, and some novel applications of the law. This session will include an interesting review of the instructor’s current research related relating to financial statement numbers and accounting text books.

• The tests in the Nigrini Cycle of audit tests that look for abnormal duplications of digits, digit combinations, specific numbers, and exact duplications or close duplications of data. This section will include the links to free Excel-based Benford’s Law software.

• The case studies will include data from an analysis of purchasing card data and purchase order data for the District of Columbia (Washington, DC).

• The Nathan Mueller fraud including a description of the scheme, effective preventive and detective measures, and some personal statements of responsibility from Nathan Mueller.

• Other frauds such as the Charlene Corley case (featured on both American Greed and Evil Twins) where she stole $20 million from the Department of Defense through inflated shipping charges, and the Harriette Walters tax refund fraud case where the millions of dollars could have been avoided by using some basic proactive detective tests.

• Analytics insights from the Rita Crundwell of Dixon, Illinois case and the Katherine Harrell bank fraud where she was sentenced to a single day in jail for stealing $500,000 from customer accounts.

• The Duluth, Minnesota Susan Thompson case where a member of the management team embezzled $220,000 and was sentenced only to probation with only a partial restitution.

• The conclusion will emphasize that the legal system is overloaded and cannot be relied upon to be a serious deterrent against fraud. Companies and government agencies therefore need to have strong internal controls and effective and efficient proactive fraud detection mechanisms in place.

Each paid attendee to the seminar will receive a signed and dated copy of either "Forensic Analytics" or "Benford's Law" by Mark Nigrini which is a $60 value. The registrant will select which book they want during the registration process. If you would like to buy extra copies of either book, please e-mail registration@houstoniia.org to make sure an extra copy is on hand at the seminar.

Who should attend?

The workshop will be valuable for internal auditors, fraud examiners, and investigators with a general day-to-day familiarity with obtaining and importing transactional data, and who would like to explore and exploit the potential of forensic analytics. The workshop would also be valuable to other accountants and investigators who are thinking of moving into the forensic and data interrogation field.

LUNCH

Title: The Nathan Mueller Fraud Case

Summary of Topic: Mueller was an accountant in a large insurance company.  Over a period of four years he embezzled $8.5 million from the company.  We’ll review the fraud scheme, some of it in Nathan’s own words, with photos of the money laundering activities and various other aspects of the scheme.  We’ll also discuss, in detail, the effective prevention and detection strategies.  The case is described and discussed in the August, 2014 issue of the Journal of Accountancy.

Learning Objectives:

·        Examine the belief that fraudsters actually need a real pressure to commit fraud.

·        Demonstrate that fraudsters only need one or two internal control weaknesses to carry out a scheme.

·        Assess the danger that fraudsters look and act like loyal and diligent white collar employees.

·        Discover that the use of one or more simple anti-fraud measures would have prevented the scheme from successfully ballooning

Experience level: Intermediate

Prerequisites: None

CPE Credit(s):  1 hour (Lunch) plus 7 hours (Seminar)